The Chairman (orally: November 26, 1974):
1 This is an appeal by Nathan Joseph Divinsky from reassessments of the Minister of National Revenue for the 1970 and 1971 taxation years.
2 This is another of the very difficult cases under paragraph 11(1)(l) where, although there is a written separation agreement that meets the technicalities of the section, there is a problem in breaking down the payments that are to be made. For instance, in paragraph 4 of the agreement, what might be called the “straight alimony” payments are set out, and in paragraph 5 the taxpayer has agreed to incur certain other expenses, such as monthly instalments (including taxes) due under a mortgage, insurance on the residence, fuel, summer holidays for children, dental expenses, medical expenses, optometry expenses, Hebrew school tuition fees, weekly allowancs, ballet and music instruction, all of which, except for the payments on the house, are for the sole and exclusive benefit of the children.
3 With regard to the decision in R E Hastie v Minister of National Revenue, [1974] C.T.C. 131, 74 D.T.C. 6114, which was followed by myself in J A C Belanger v Minister of National Revenue, [1974] C.T.C. 2170, 74 D.T.C. 1130, I think the Hastie case has taken a more realistic and modern day approach to the application of paragraph 11(1)(l), which I firmly believe to have been inserted into the Act more for the protection of the issue of the marriage than for the benefit of the spouses themselves.
4 In this case it is unusual that the appellant taxpayer, who is a university professor, did not claim all the amounts that he was required to pay under the separation agreement, but has limited his claim to payments to the wife under paragraph 4, and to disbursements under paragraph 5 in respect of the mortgage interest payments and the fuel, in so far as the house is concerned, plus the cost of piano lessons and allowances for the children for both years and summer camp expenses for 1972 only.
5 He was also required, by paragraph 6 of the agreement, to pay any income tax that the wife would be required to pay on any sums received by her pursuant to this agreement, but, although he has paid these taxes, he has not made any claim in his own return for a deduction in respect thereof, and explains, as I suppose a mathematician would be readily aware, that not until you finally arrive at the Nth degree can you stop compounding what has been paid.
6 In any event, in following both the Hastie decision and my own decisions in subsequent cases, I am prepared to allow the appellant to deduct what I feel are payments made for the necessities of life for the children and the obligations required under the agreement for the wife. Therefore, I would allow the mortgage and fuel payments in respect of the house and disallow the payments made in respect of piano lessons, books, summer camp and allowances for the children.
7 This results in the appeal being allowed in part, deductions totalling $983.50 being disallowed for the year 1970 and deductions totalling $1,280 being disallowed for 1971, if my arithmetic is correct. As I have said, the appeal will therefore be allowed in part and the matter referred back to the Minister for reassessment accordingly.
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